On January 20, 2025, Donald Trump returned to the US oval office. Since long before his return, he promised to implement tariffs into many countries. It is currently mid April and there has been a vast amount of fluctuations in the world’s economy. Beginning with Canada and Mexico with a 25% tariff each, Trump began his journey into enforcing taxes on imports and exports of other countries, just for the benefit of his own. Afterwards, Trump would place tariffs across every continent, including Antarctica, where there is only penguins. As of right now, a 90-day tariff pause is in effect for reasons that will be explored later. Let us take advantage of this pause to recap exactly what just happened.
1. The Tariff equation
Before we explore anything, we should understand exactly how tariffs are decided. Tariffs are not just random percentages that imports and exports are being taxed with. There is an actual tariff equation that the official finance ministers use to set the necessary percentages. For simplicity, we will only explore how the equation works. However, if you choose to see the equation for yourself, click here.
The equation works with subtracting the imports from the exports, and dividing that by constant A × constant B × the imports. In an equation format, it looks like (exports – imports) / (A × B × imports). This tariff equation is used for every country that Trump wishes to place tariffs on. Note that imports and exports are real data and will vary between countries. That is where the different tariff percentages come from.
While that answers how they are calculated, it is still unanswered why certain tariffs are super high. That is where the constants A and B come in. In the case of many countries, research discovered that trump set the A and B values as 4 and 0.25, respectively. Recall the equation format and if you multiply 4 × 0.25 in your calculator, you will realize that the constants multiply into 1, and any number multiplied into 1 gives the same number. With those parameters, the equation is truly (exports – imports) / imports. Remember, those constants could change, but for most countries recently, A × B is just 1.
2. The Tariff Numbers
Now that we understand how the equation works, let’s dive into the actual percentages, as well as the trend. In the real world, tariffs are usually placed on certain resources (ex: electricity, coal, agriculture). To give concise information, however, only the percentages will be discussed here and not what they’re placed on.
Initially, 25% tariffs were placed on Canada and Mexico, as well as 10% on China. Short after, Canada and Mexico offered appeasement to Trump so they were provided a 30-day pause. After the pause, China was hit with an increase to 20% tariffs and many other countries have already experienced tariffs. All of the affected countries became furious (since everything costs more so economies are experiencing recessions) and so they hit the US back with tariffs. Trump responds with “reciprocal tariffs” where he increases the tariffs for every country. Now, Trump had just announced the 90-day pause where every country – except China – experiences the baseline 10% tariffs.
Three interesting notes are that Trump’s China tariffs continuously increased. They currently have 145% tariffs, which means that products in China now cost around 2.5 times more than normal. Second, Trump also put tariffs on Antarctica, where there are only penguins. Lastly, Russia is not on Trump’s tariff list. It has been revealed that ending Russia’s war is a top priority and Trump threatened Putin to ceasefire or face 50% tariffs. There are potentially other reasons to their omission, including the fact that US sanctions are currently in Russia.
3. The World’s Response
Of course, every country is not happy with Trump’s tariffs. By making select resources from the US cost more, recessions are happening all around the world. Trump hits many countries with tariffs and those countries are fighting back with their own tariffs. Thus, this is the tariff war at its finest and Trump’s unpredictable actions make it difficult to foresee what is next.
However, now more than ever, there are unlikely alliances forming around the world, as an effort to fight against Trump’s tariffs. The most unlikely one would have to be between Japan, China, and South Korea, despite their historical opposition. At this point, it is clear that there is an international response, and alliances like that can exert international influence.
As a matter of fact, Trump’s 90-day pause is said to be the result of these international works. The overwhelming responses from countries may be the reason why Trump is now holding back; that this pause would not only provide relief, but allow the US economy to rebuild a bit. By leaving China with 145% tariffs instead of the baseline 10%, Trump can now only focus on China while preparing for what shall come next in this tariff war.
TL;DR
Trump returned to office on January 20, 2025. Since then, he has forced tariffs on many countries. The world is not happy and fights back with tariffs against the US. Due to overwhelming responses, a 90-day pause has been called. Currently, all affected countries are in a baseline of 10% tariffs, except China, who has a 145% tariff instead. Trump’s tariff war unfortunately extends to Antarctica, where there are only penguins.